May 13th, 2010
03:13 PM ET

Chasing Taliban’s overflowing coffers, cash couriers

Editor's note: This is part of series on terrorist finances included on the This Just In blog. Check out the entire Security Brief series 

With its columns and colonnades, the U.S. Treasury is one of the grandest buildings in Washington. But a handful of its staff are currently working in less salubrious surroundings. They’ve been dispatched to Kabul in an effort to stifle the Afghan Taliban’s cash-flow. Their mission: to detect money laundering schemes, investigate offshore accounts and cell-phone transfer, and try to rein in Afghanistan’s huge “informal” banking sector.

It is an uphill task. The United Nations Office on Drugs and Crime estimates the Taliban’s revenues from illicit drugs alone last year at $150 million. U.N. sources say that insurgents (a wider definition than the Taliban) made between $450 and $600 million out of the opiate business between 2005 and 2008. But it may be much more. The U.N. estimates the “narco-profits” made in Afghanistan at $2.8 billion. A huge sum is unaccounted for.

The Taliban tax every stage of the process: the farmers, processors and distributors. Bringing in the poppy crop is so important that Taliban attacks fall during the harvest, as fighters trade their guns for scythes.

In 2009 the crop amounted to an estimated 7,700 tons. That makes a serious amount of heroin. Currently the preliminary forecast for this year is for a similar harvest -– from an area of 300,000 acres. (The island of Manhattan is about 20,000 acres, to give you a sense of just how huge the cultivated area is.) UN officials in Kabul say that’s not encouraging -– as it may compound the oversupply of heroin relative to global demand.

Estimating this year’s crop is complicated by a mysterious blight known as the “poppy plague” which has affected many fields in Helmand province. But even if poppy plague reduces the crop, UN officials note that huge amounts of opium are in storage.

“Opium can be kept for many years, is easy to transport and the seeds can be taken if you are displaced,” one UN official in Kabul says. There’s concern that some of the opium in store will be released onto the market this year to benefit from an “irrational high in opium prices,” the official adds.

Some Taliban have branched out into extortion and kidnapping, shaking down trucking companies that resupply NATO, for example. And they don’t put the money in a checking account.

Financial dealings in Afghanistan are dominated by informal networks known as hawala, which may account for 80 percent of transactions. Essentially, a client who owes money to someone in another city or country gives cash to a hawaladeer who takes a commission and instructs a fellow broker elsewhere to pay out the cash. While the hawaladeer may use bank accounts to manage the transfers, their clients don’t. There is therefore no paper trail.

Treasury officials admit that closing down the hawala down is not an option. So the U.S. approach is to try to coax the hawaladeer into the regulated system and license them. Not that the Taliban will roll over and allow that to happen. They rely on the hawala to launder the “taxes” they levy on the drug trafficking process.

After years spent focusing on disrupting al Qaeda’s finances, U.S. Assistant Treasury Secretary David Cohen wants to bring the same focus and techniques to tackling the Afghan Taliban. Cohen leads the Treasury’s Office of Terrorism and Financial Intelligence. He is encouraged by cooperation of other governments, especially in the Gulf, who are beginning to see the Afghan Taliban in the same light as al Qaeda. In the United Arab Emirates six men – five Emiratis and one Afghan – have gone to jail after being convicted last month of trying to funnel money to the Taliban.

One U.S. official says the U.S. is now helping Gulf governments to identify and chase down the “cash couriers” – people who literally carry bundles of hard cash to and from al Qaeda, the Taliban and other groups, outside the banking system.

But crucially Pakistan – on the frontline in the battle with militant groups – is one of eight countries that has shown “strategic deficiencies in alleged money laundering and terrorism financing.”

That was the conclusion earlier this year of the Financial Action Task Force, an inter-governmental body aimed at countering illicit financial transactions. Pakistan’s legislature recently passed an anti money-laundering bill to try to tighten regulation of the financial sector, but financial analysts says its implementation in a country where informal financial transactions thrive will be a challenge.

For now the Taliban appear to have plenty of cash with which to buy weapons and other hardware, and to pay fighters. Some analysts say the US strategy of abandoning some outlying bases in remote areas close to the border with Pakistan may make the insurgents’ exploitation of the opium trade easier.

And in his analysis last year, General Stanley McChrystal said that even without the drugs trade, the Taliban and other groups would have income from levying taxes and fees at checkpoints and among villagers under their control, as well as from kidnapping and foreign donors.

“Eliminating insurgent access to narco-profits,” he wrote, “even if possible and while disruptive – would not destroy their ability to operate so long as other funding sources remained intact.”

Other analysts agree with McChrystal’s assessment. They don’t expect the Taliban’s coffers to be emptied in short order. Those Treasury officials laboring in Kabul and Washington have plenty of work ahead of them.

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Filed under: Taliban
soundoff (11 Responses)
  1. Canty

    In most cases, cash is not taken to Europe or the USA instead is "transfer" locally as loans from families living in that country to other people and it is "repay" the same way in the source country.

    May 18, 2010 at 2:44 pm | Report abuse |
  2. Jeff Nevison

    I am in the United States Air Force and am currently deployed near Kabul in a PAO/News agency office. We just recently did an article in which we are attempting to convey an achievement in our efforts to cut down on corruption in the Afghan National Police. This article marks a milestone. Here is the link:

    May 17, 2010 at 4:49 am | Report abuse |
  3. Peyote

    All wars are fought with some financial incentive involved. Look at history with an unbiased view and you can see the truth. The media and governments involved rely on a group of controlled opposition to believe that what they are doing is justified. Without this group riots and revolts would prevent the unjust plunder of foreign resources. This war is no different. This war is fought as a last ditch effort to steal some money before the creditors come calling

    May 16, 2010 at 3:13 am | Report abuse |
  4. Iraq Paramedic

    Hey Smith in Oregon, I will buy you a beer when I get back & I don't care if it is in Oregon or Texas. Take care & keep posting.
    May GOD Bless & keep us all !!!!!!!!!!!!!!!!!!

    May 14, 2010 at 12:02 pm | Report abuse |
  5. Smith in Oregon

    Is it a coincidence or terribly IRONIC that Federal Treasury agents descend on Afghanistan AFTER the once enormous Opium-Poppy fields were planted to the maximum in all 35 Afghan districts under the horrific Republican Bush-Cheney administration and are now down to only 5 Afghan districts.

    AND in all of the remaining Opium-Poppy fields in those 5 districts, a fungus has descended upon the roots of those Opium-Poppy's drying up the roots and the seed head's before they can be cultivated for Opium.

    For nearly 10 years the entire Karzai CLAN have allegedly been the major Opium-Heroin exporting brokers in Afghanistan which results in many Billions of untraceable dollars.

    Allegedly the CIA ordered the US and NATO troops to not molest nor destroy the Opium-Poppy fields supposedly protecting their interest along with the Karzai Clan's income.

    IF the Federal Treasury Agents were honestly looking to put a dent in the enormous amounts of untraceable money being generated and flowing into and out of Afghanistan, they would have napalmed all of the Opium-Poppy fields during the Bush-Cheney era. Hundreds of Billion's of dollars have since been generated by the Heroin trade out of Afghanistan which has washed over the entire planet.

    AND NOW when the Opium-Poppy fields are swiftly declining and dieing out, the Federal Treasury Agents show up? Huh? That dog won't hunt.

    I wouldn't be surprised if the entire Afghanistan War was quickly resolved and wound down after the Opium-Heroin exports dry up in the months ahead.

    May 14, 2010 at 11:35 am | Report abuse |
  6. Iraq Paramedic

    It is about time, heck look at how dogedly the IRS tracks down us USA citizens when we owe them money. Turn them blood suckers loose on the Taliban & drug dealers & they'll get their money one way or the other.
    May GOD Bless & keep us all !!!!!!!!!!!!!!!

    May 14, 2010 at 7:29 am | Report abuse |
  7. Daniel-2

    @aaron armswothy.Again well put.This new generation knows nothing but hatred and with their right-wing lynch mob mentality,they love war and bloodshed and they love the idea of bullying.This is the "me" generation,that is,they think and live only for themselves with little concern for those who are different fron them and in some cases,even hate them.This contributes largely to the Tea Party Movement with all it's hate spewing.anti-intellectual activities.

    May 14, 2010 at 7:09 am | Report abuse |
  8. Freak show

    What a freak show here, we have a good article about triing to defund the enemy, and this is the best comments you have? Like being at a high school drug party of the idiot team. CIA....seriously? You guy's should "come down" before you type your wisdom.

    May 14, 2010 at 5:26 am | Report abuse |
  9. A kid from Sodak

    This situation seems to parallel the situation in Mexico/Central America/South America in that violent gangs profit from the prohibition of certain drugs. If all drugs were legal, then farmers could grow the plants that yield these drugs (cocoa, poppy, marijuana) under the protection of their respective governments, not under the protection of violent gangs. The governments could tax the sales and profit instead of the gangs. I understand that drugs like heroin and cocaine pose great health risks, especially concerning overdosing and addiction. But if our government regulated the substances and educated people on the effects (just like cigarettes and other tobacco products), then I believe that most people would make smarter, more informed decisions concerning the use of these drugs. I don't buy into the theory that if drugs were legalized, usage would increase. With hard drugs like cocaine and heroin, it seems that if a person wants to use it, they will use it. Keeping these drugs illegal just prolongs the inevitable, and sometimes prohibition exacerbates usage due to the fact that drug dealers do not regulate the amount sold at once and they sell multiple types of drugs. So if you are buying marijuana (as many people do), your dealer might also be selling cocaine and heroin since they are all illegal anyways. If all drugs were legal, there would be specific stores that sell specific drugs. This would result in safer drugs (due to regulation) and no contact with drugs other than the drug the consumer intends on purchasing. Additionally, stores could be prohibited from selling/serving people who are already high on drugs (similar to how liquor stores and bars are not supposed to serve people who appear intoxicated). Addiction and overdoses happen regardless of the legal status of drugs, so we might as well offer people with addiction problems treatment and alternatives (kind of like how people trying to quit smoking have nicotine patches, nicotine gum, and even electronic cigarettes! Check it out!) instead of throwing them in jail with dealers and other addicts. Throwing all the dealers and addicts in jail together just exacerbates the problem because dealers/users develop new connections. Jails serve as illegal drug networks for dealers and addicts.

    May 14, 2010 at 4:52 am | Report abuse |
  10. aaron armsworthy

    We got some creepy little militant kids these days.If they had just of sit down and smoked a bowl of hash with tht taliban like we used to and just kicked back and made peace before there creepy militant dads ruined it all for everyone,none of this stuff probably would have happened no 911 or nuthin if you would have tried to relate culturally.You know american indians used to smoke peace pipe but custer ruined that too.This is a brainwashed generation they just want to kill,kill.kill.But its the older guys my age that they are following faults,I grew up with these guys i couldnt stand them in high school,the dont have a sense of humor,usually they were the bullys and at the same time the tattle tells these guys just werent fun to be around not someone to invite to a party.But they had to go and ruin the whole party for everyone.You cant have no fun anymore.You gotta run around spying and killing and apprehending and detaining.we didnt no these words growin up it was parting smokin tokin.I feel sorry for these kids they dont have any decent role models.Theyre militant role models ruined the party and locked everyone up.Lifes pretty boring these days about the only thing happening is the parade honoring the troops but we saw that same float last week.

    May 14, 2010 at 2:47 am | Report abuse |
  11. Smith in Oregon

    I rather doubt Treasury Agents in Kabul tracking down money laundering organizations has the blessings of the CIA. It entirely appears the CIA has a large invested interest in obtaining some of the untraceable Billions from the Opium-Heroin drug trafficking.

    Lately on that front it appears that is slowly drying up, I imagine the CIA is not pleased nor happy with that cash cow drying on the vine. During the horrific Bush-Cheney administration, as much Opium Poppy's were planted in all 35 provinces across Afghanistan. Now only 5 provinces in Afghanistan have Opium-Poppy fields and all of the current fields have become infested by a fungus that attacks the Opium-Poppy plants at their roots drying up the seed pod before it can be harvested for its Opium.

    And now when that cash cow is literally dieing on the vine, Treasury Agents come to Kabul to check on money laundering organizations? Seems way to late and more likely a PR move to show that the Federal Treasury is aware of the hundreds of Billions of untraceable dollars generated when the horrific Bush-Cheney administration allegedly gave the Green-Light to the Karzai Clan of Opium-Poppy growers. That has largely dried up and gone away and now the Treasury agents show up?

    May 13, 2010 at 5:31 pm | Report abuse |